CRA indicates that auditors should communicate their reasons for requiring information from taxpayers
Comments of Ted Gallivan included:
Q.3 CRA’s annual audit yield has grown from $8.8 to $13.8 billion gross, with the use of around 5% more in CRA resources. Having said that, the goal is to increase compliance rather than to increase audit yields (Q.10).
Q.5 and 6. CRA is evaluating whether the focus of risk assessment should be done on a transaction-by-transaction, taxpayer-by-taxpayer or return-by-return basis. If CRA sees a big risk indicator, it should tell the taxpayer at that point, rather than waiting for an audit, when decisions have already been made and positions solidified. More generally, CRA is considering getting information to taxpayers even before they file their returns (Q.2).
Q.7 CRA decided not to appeal the BP decision to the Supreme Court because it would effectively have been asking for absolute authority. Headquarters then clarified to field auditors that there must be a valid business reason for seeking information, and that that reason should be communicated to the taxpayer.
Q.9 Although the Panama papers and other leaks did not necessarily relate to the most aggressive types of tax avoidance, it was necessary for CRA to respond to show its resolve. The fact that the 30 exchanging jurisdictions all gave the list a priority resulted in improved information-exchange functioning.
Q.10 There will be a trend towards better coordination within different branches of CRA, such as between the rulings and audit functions (or possibly involving Appeals) and more involvement from Justice, before a decision is made to assess taxpayers.
Neal Armstrong. Ted Gallivan at the 27 February 2019 CTF Corporate Management Tax Conference, including summary of Q.7 under s. 231.1(1).